CONFIDENTIAL
九大
His Excellency
RECEIVER IN
RESISTON M6, 81
18 JAN 1974 |
Mr D J McCarthy CMG
Abu Dhabi
Foreign and Commonwealth Office
Dear Donal
MERCHANT BANKERS ET AL
London S.W.1
17 December 1974
RECEIVED 1. REGISTRY No.
18 JAN1974
DA.
Sterling file
HKK. 5/1
(261)
18.1
I am now able to follow up my letter of 14 December and answer the outstanding query in your letter of 8 December, namely what assistance you should give representatives of "off-shore" and non-UK investment houses who seek funds in your area. (Patrick Wright's letter of 19 December and Sharkey's of 31 December have already covered the other points raised in your letter).
2. Our attitude to bankers seeking funds in the Gulf is fairly set out in the first half of llenry Turner's letter of 14 January to Ian Lewty (copy enclosed). So in general you need feel no obligation to help foreign or "off-shore" operators in your parish.
3.
However, in the case of Hong Kong-based banks, there is a slight problem because of Hong Kong's colonial status. DSP Vol 15 Section III paragraph 158 deals with the point in not very helpful terms; a revision of its terms has been advocated but agreement has not yet been reached, In some cases our posts have been told unofficially to give "all aid short of assistance". In the case of the Hong Kong and Shanghai Banking Corporation, I think you can reasonably expect them to seek any help they require from their subsidiary, the British Bank of the Middle East.
4. Finally, I should like to clarify a point mentioned in paragraph 4 of your minute of 27 November, which you copied to Catherine Pestell. Because Hong Kong lacks a central bank, the sterling holdings of the commercial banks there were brought within the scope of the former Sterling Agreement with the Hong Kong Government. This led to certain difficulties, especially last summer when the Agreement was about to expire and it was not known what arrangements would follow. the present guarantee arrangements now cover only the Hong Kong Government's sterling reserves; sterling held by the banks there is now little different, so far as we are concerned, from any other overseas private holdings of sterling.
However,
5. Your minute of 27 November also touched on the Reddaway Report and UK attitudes to investment.
You will
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